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How Many Credit Cards Should I Have - Coast Tradelines

Dec 19

How Much Credit Cards Should I Have? The Intersection of Credit Cards and Tradelines Explained


One question that boggles people in their personal finances is "How many credit card should I get?" This question becomes especially pertinent when are thinking about adding tradelines to your credit score. Let's clarify this issue by providing you with the information and a plan to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards is not just the result of personal convenience. It also influences your credit score. Although you're aware that having an account with a credit card will improve your credit score, you're probably confused about the number you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of the number of credit cards to get, let's first look at the benefits and downsides of having several credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit could be greater. A credit limit that is high is advantageous for emergencies or large purchases.
  • Utilize credit cards with rewards or cashback programs to reduce your expenses on things on a daily basis.
  • Your ratio of credit utilization is likely to increase. The credit utilization ratio refers to the percentage of your available credit that you currently use. Utilizing multiple credit cards can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to spend too much and end up in debt.
  • It's not difficult to make unexpected purchase that you cannot afford if there are a lot of credit card accounts.
  • The management of multiple credit cards could take long and time. More so if the payment schedules differ.
  • More credit cards can lead to the utilization of credit to be high. A high CUR can negatively impact your credit score.
  • Different cards offer different perks. Having too few cards means not gaining the many advantages.
  • On the other hand having too many cards can make keeping track on payment due dates a challenge. It can result in overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Find cards that offer advantages, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees It is important to make sure the card's advantages outweigh annual fees.
  3. Interest Rates: Lower APRs are vital unless that you'll finish the balance every month.
  4. Credit Limit: A higher credit limit can increase your credit utilization ratio as long as you don't use it to the max.

Average Number Credit Cards Should I Have

Now that we have looked at the advantages and disadvantages of owning multiple credit card accounts, let's see how many credit cards you should be carrying. How many credit cards is too many, and how many are enough?

Financial experts recommend having between 3 and 5 credit cards for a well-rounded credit history. This can provide a variety of advantages and improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding how many credit cards one should have. These factors include:

  • Credit score and past history Your credit score and record will help determine the number of credit card you should have. You'll only be able to qualify to get one or two credit cards in the event that you have a low credit score or have a poor credit record.
  • The amount of your earnings and expenses will be vital. If you have an excellent income and little expenses, you are able to take on more credit cards than those with lower incomes and higher expenses.
  • Financial goals and priorities: Your financial goals and priorities can determine how many credit cards you need to own. If you're looking to improve your credit score or earn rewards, consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards based around different scenarios:

  • For people with no credit history If your credit score is not great, you could qualify for one or two credit cards.
  • For people with a good credit score: If you have an average credit score, you might have a couple of credit cards.
  • For people with outstanding credit scores: If you have excellent credit you may be able to hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined the number of credit card you should have, let's explore how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can improve your credit score in various ways and include:

  • Increased credit utilization ratio: Having multiple credit cards could help improve your CUR. It spreads out your balances across several cards.
  • Diversified credit mix: A diversified credit mix can help improve your credit score.

Negative Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can harm your credit score in the following ways:

    • Higher risk of late payments and delinquencies: Owning a lot of credit cards could result in an increased risk of avoiding payments. There is also a possibility of becoming indebted to your credit card accounts.
    • New credit inquiries and increased credit accounts: Applying for multiple credit cards could create multiple credit inquires and new accounts. Both can negatively impact your credit score.
    • Lower average age of your account A variety of credit cards can help lower the average age of your accounts. This can affect your credit score.
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